Counting to 2000: China's Computer Puzzle
May 11, 1999
By MARK LANDLER
EIJING -- When Zhang Qi, the state official who coordinates
China's Year 2000 computer policy, began asking government
ministries last August for monthly reports on their readiness, most simply
ignored her.
"I was not satisfied," said Ms.
Zhang, a 53-year-old career
bureaucrat whose flinty
demeanor seems perfectly
suited to her task. "We are
here to offer them service and
technical support. But quite a
few did not send over information, and we had to call them to find out
their situation."
Ms. Zhang got action only after she reminded her colleagues that
confronting the Year 2000, or Y2K, problem was a top priority of Prime
Minister Zhu Rongji and other leaders. "It takes some time to make them
realize and believe the problem," she said with ill-disguised impatience.
In contrast to the United States and Europe, where the public debate
over the Year 2000 issue has gone through a full cycle -- from
near-hysteria to having many people dismiss the whole thing as a minor
annoyance -- China is just waking up to the idea that on Jan. 1, 2000,
some of its computers may not work.
(In general, the problem results from the reliance of many programs on
only the last two digits of a year. Unless updated, some computers and
electronic machinery might misinterpret "00" as 1900 rather than 2000,
substitute another year or simply freeze.)
Experts here warn that China could suffer everything from severe
disruptions in power and water to lesser but still expensive glitches in
telecommunications, banking, public health and transportation. And
China's woes could spill over to Hong Kong, where banks, brokerage
firms and shipping companies with close ties to the mainland are worried
about lost cargo and missing payments.
"China is very, very behind in Y2K contingency planning," said Joseph
Sweeney, director of research at the Hong Kong office of Gartner
Group, a research firm that specializes in the Year 2000 problem.
"There's no way many of their organizations will come up to speed in
time."
Yet so little is known about the nature of the problem here that the
experts are often reduced to a digital-age version of reading tea leaves as
they scrounge for clues about how and where China will be affected. The
dearth of data is compounded by China's computer network -- a mix of
1960s-era mainframe machines and pirated copies of the latest Windows
software running on a variety of personal computers.
Tim Shepheard-Walwyn, the chairman of the Global 2000 Coordinating
Group, a consortium of 300 banks that monitors Year 2000 compliance,
said he did not have enough information even to make a judgment about
China. He visited Beijing in March to prod officials at the People's Bank
of China for more details.
Part of the resistance is that China is not nearly as dependent on
computers as the United States or other Asian countries. Seventy percent
of people live in rural areas, where computers -- let alone computer bugs
-- are barely known. Even in big cities, the prospect of computer failures
is not frightening to a country that measures calamity on the scale of last
year's Yangtze River floods.
"Food still comes in on people's backs, water comes from a dam upriver,
and people don't use that much electricity anyway," said R. Mark
Mecham, deputy director of the U.S. Information Technology Office in
Beijing, a trade association that represents more than 50 computer
makers.
At a minimum, though, the Year 2000 problem could cramp China's
economy, which is growing despite the Asian slump. Gartner Group
estimates that 66 percent of Chinese companies will experience some
failure in their computers. That compares with 40 percent of companies
worldwide.
Experts said China's Year 2000
problems were likely to be
concentrated in just the kind of places
where the government wants to
showcase its future as a
technologically advanced economy:
the Pudong district of Shanghai and
Shenzhen, the special economic zone
that borders Hong Kong.
In a recent survey, a Chinese research firm, Century Perspective Market
Research, found that only 15 percent of commercial and governmental
organizations had fixed Year 2000 flaws and tested their systems.
Numbers like these alarm foreign companies here, as well as companies
outside China that deal with the mainland. Hong Kong's container port,
for example, processes half of China's exports and 40 percent of its
imports. Many of the invoices for those goods are settled by payments
that flow electronically between banks in Hong Kong and their
counterparts in mainland China.
If the Chinese banks suffer computer malfunctions, it would paralyze
hundreds of millions of dollars of settlements within days. Alan Fung, an
area manager at Standard Chartered Bank in Hong Kong, said the banks
were already devising plans to channel transactions through larger
Chinese banks. Failing that, they might resort to writing out transactions
on paper.
"If the Chinese banks fail to process transactions for one or two days,
that might not be a problem," Fung said. "But if the interruption is for four
or five days, that's another issue."
Similarly, Hong Kong's major utility, CLP Power, buys some of its
electricity from power plants in mainland China. Among those is the Daya
Bay nuclear power station in neighboring Guangdong Province. A
spokesman said 97 percent of CLP's Hong Kong systems were ready.
But he acknowledged that the company had little control over Chinese
suppliers like Daya Bay.
American computer companies have fears of a different sort. They sold
China most of its 10 million computers. And although many have
dispatched teams here to repair bugs, they are afraid of being dragged
into Chinese courts if Year 2000-related glitches lead to costly
interruptions in services.
"It's a very sensitive issue because relations with the government are
obviously very important," said Greg Shea, the director of
communications and government affairs for Hewlett-Packard in Beijing.
Outsiders say they are
impressed by the noise Ms.
Zhang has generated since she
became China's Year 2000
czar last August. With a
propaganda campaign that
includes advertising, newspaper
articles and trips around the
country, Ms. Zhang has
introduced the term Y2K to the Chinese vocabulary.
China has also made splashy symbolic gestures -- such as requiring top
officials of the Civil Aviation Administration to be aloft on New Year's
Eve as a show of confidence in the air traffic control system.
But Ms. Zhang has been more successful as an evangelist than a
trouble-shooter. That is because, in fixing Year 2000 problems, she must
overcome a gantlet of technological, financial and institutional hurdles.
One big problem is that an estimated 96 percent of the software in China
is pirated. Software manufacturers generally refuse to repair products not
sold under a license. Faced with buying a license to become Year 2000
compliant, many Chinese companies simply opt to leave their equipment
alone.
China's straitened finances are an even bigger hurdle. The central
government has given provincial and local governments a deadline to be
compliant that is supposed to lead to repairing all identified problems by
the end of September. But Beijing also says they must foot the bill.
China's banks alone have spent $600 million on Year 2000 fixes,
according to Ms. Zhang, so selling the party bosses in China's unruly
provinces on such a costly chore for public facilities and the many
businesses still under government control is no small challenge.
"Officials who want to be promoted don't see this as an opportunity,"
said Chen Xinxiang, a gregarious engineer who is overseeing the Beijing
municipal government's Year 2000 preparations.
Chen, who has a Ph.D. from Pennsylvania State University, took on the
project as a sideline to his efforts to promote Internet use in Beijing. He
said he was confident that China's capital would not suffer widespread
breakdowns in transportation, telecommunications or electricity.
But Chen said there were potential trouble spots. The plant that supplies
two-thirds of Beijing's water cannot be shut down for testing, and Chen
said he did not know whether its computers were vulnerable. Water
would still flow if the computers malfunctioned, but it might not be
purified.
On April 9, Beijing had a kind of dry run for Jan. 1. Because it was the
99th day of 1999 -- many computers were programmed to read a string
of 9's as the end of a file -- some experts said April 9 was the first of a
series of dates that could cause electronic glitches. Chen said there were
three computer crashes in the city: the reservations system of a luxury
hotel, the network of a company, and the board that displays exchange
rates at a bank.
"I've been telling people, 'This is a tiny version of the Y2K issue,"' Chen
said. "It was like an alarm."
For all his jitters, Chen said he would happily fly on New Year's Eve.
That reflects a growing view -- even among foreigners -- that China's
skies will not be filled with dangerously wayward airplanes. Officials here
contend they are only six months behind the Federal Aviation
Administration in the testing and repair of the country's air traffic control
system. (If so, that confidence could be overdone, since even the FAA
says it does not expect to finish until June.)
Yi Qun, the deputy director of the Civil Aviation
Administration, said it was not hard to debug China's
guidance and communications equipment because
most of it was made by foreign suppliers.
With its top aviation officials at risk, China plans to
adopt precautionary measures, such as spacing planes
farther apart in the hours just before and after midnight
on New Year's Eve, which falls on a Friday this year.
As the Year 2000 draws closer, the focus among
computer companies here has shifted from how to get
ready for Jan. 1 to how to deal with the fallout from
inevitable failures afterward. IBM, Hewlett-Packard
and other companies are bracing for a blizzard of
lawsuits demanding compensation for Year 2000
losses.
"It's still far from clear that American companies will get a fair hearing in
Chinese courts," Mecham said.
IBM has played a central role in advising the Chinese government on
Year 2000 issues. But executives at rival companies said it was taking a
low profile as the threat of lawsuits loomed. IBM declined to discuss its
efforts in China.
The companies may have reason to worry. Beijing initially ordered its
ministries to demand free repairs. Suppliers that refused would no longer
be allowed to sell products to the government, according to a mid-1997
directive.
Ms. Zhang has since softened that line, saying China no longer expects
companies to bear the entire cost of repairs. "The question is, how much
should they pay?" she said. "Chinese users have already paid a lot. And
as we know, big companies like IBM never do anything free of charge."
In general, though, Ms. Zhang has cultivated close relations with the
computer industry. It is easy to understand why: With 18 government
departments reporting to her on Year 2000 readiness, she needs a
constant stream of advice from experts on where to channel her energies.
Of the government departments, in fact, only the People's Liberation
Army does not have to report to Ms. Zhang on the Year 2000 issue.
"Maybe they are able to solve it themselves," she said with a faint smile.
Copyright 1999 The New York Times Company |
